UAE Minister Validates US Concerns Over Chip Supplies, Secures $1.5B Microsoft Deal

Key Takeaway

• UAE acknowledges US concerns over chip technology potentially reaching China, emphasizing its strategic partnership with the US.
• UAE aims to become a semiconductor producer, securing $1.5 billion investment from Microsoft in AI firm G42 after cutting ties with China.
• G42's collaboration with OpenAI and Microsoft's investment highlights UAE's commitment to aligning with American technology and interests.

US Concerns on Chip Technology

The United Arab Emirates (UAE) acknowledges the United States' concerns about sensitive chip technology potentially moving from the Middle East to China. Omar Al Olama, the UAE’s minister for artificial intelligence and digital economy, stated in a Bloomberg Television interview that the region's geopolitical landscape has led to these tangible concerns among US policymakers. The US has restricted chip exports to the Middle East partly due to fears that Chinese companies, which are largely cut off from advanced American technology, could access these through data centers in the region. President Joe Biden’s administration has been actively working to prevent advanced semiconductors and manufacturing equipment from reaching Beijing, fearing their use in bolstering China's military capabilities.

“Any country that has adversaries would think that way,” Al Olama said, emphasizing the UAE's strategic partnership with the US. The UAE is seeking US support to become a producer of advanced semiconductors, a critical component for artificial intelligence. The oil-rich nation is making significant investments to become a regional leader in AI and has severed ties with China in this sector to alleviate Washington’s concerns.

UAE's Strategic Moves

In April, Microsoft Corp. invested $1.5 billion in the UAE’s leading AI firm, G42. This deal followed behind-the-scenes negotiations between the US and the Abu Dhabi-based company, during which G42 agreed to divest from China and pivot towards American technology. This move is part of a broader strategy by the UAE to reassure the US of its commitment to their partnership. G42 has also partnered with OpenAI, the creator of ChatGPT, as part of its regional expansion. Microsoft, being OpenAI’s largest investor, further cements the collaboration between the UAE and American tech giants.

UAE’s National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan, who chairs G42, plays a pivotal role in these developments. “Microsoft’s investments in the company cement the ability for the UAE and our national champions to work with OpenAI,” Al Olama noted, highlighting the strategic importance of these partnerships.

Family Office Dynamics in UAE

The UAE, particularly Abu Dhabi and Dubai, is becoming a hub for family offices, attracting significant private capital. Abu Dhabi, with its $1.5 trillion in sovereign wealth funds, is seen as the capital of capital, while Dubai is known for its lifestyle and networking opportunities. The number of registered family foundations in both cities has surged, with Dubai seeing a 53% increase and Abu Dhabi a 35% rise last year, according to wealth advisory firm M/HQ.

Abu Dhabi’s financial center, the Abu Dhabi Global Market (ADGM), offers flexible and discreet structures for billionaires’ investment entities, appealing to the region's preference for privacy. Christina Wing, founder of Wingspan Legacy Partners, noted, “They’re incredibly private. We don’t even know their names.” In contrast, Dubai’s appeal lies in its vibrant lifestyle and welcoming atmosphere for wealthy newcomers, making it ideal for networking.

Management Quotes

• Omar Al Olama, UAE’s Minister for Artificial Intelligence and Digital Economy:

  "Sometimes you are a victim of the neighborhood you are in. Any country that has adversaries would think that way. The UAE has proven to be a strategic partner with the US."
  "The deal with Microsoft, along with previous years of collaboration between the two allies, is a continuation of a series of reassurances that the UAE has given."
  "Microsoft’s investments in the company cements the ability for the UAE and our national champions to work with OpenAI."